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Telefonica Is Said to Hire Banks for Argentine Share Sale

(Bloomberg) -- Telefonica SA, the debt-laden Spanish phone carrier that has fallen 20 percent in the past year, has hired banks to sell shares of its Argentine unit through initial public offerings in Buenos Aires and New York, according to people with knowledge of the plan.

The company hired Bank of America Merrill Lynch and Morgan Stanley to organize the share sale, a move that would help raise funds for investment and cut debt, said the people, who asked not to be identified as the plans are private. The IPO, which would raise between $500 million and $1 billion, will most likely happen in the second half of the year.

Argentina is Telefonica’s second-biggest market in Latin America after Brazil, earning revenue last year of 3.5 billion euros ($4.3 billion). Telefonica faces tougher competition in the South American nation after Grupo Clarin SA, the country’s biggest media company, last year agreed to merge its cable-television unit with phone operator Telecom Argentina SA.

Representatives for Telefonica and Bank of America declined to comment. A representative for Morgan Stanley had no immediate comment.

Telefonica fell 0.1 percent to 8.15 euros at 9:32 a.m. in Madrid. The shares are up 0.3 percent this year, giving the carrier a market value of 42.3 billion euros.

Telefonica ended 2017 with net financial debt of 44.2 billion euros and while cutting leverage is among the top priorities for Chairman Jose Maria Alvarez-Pallete, the company earlier this year also announced that it would seek ways to improve the valuation of units it believes are undervalued by investors.

Telefonica Argentina yesterday voted to change certain company by-laws, clearing the way for an IPO.